Societe Generale describes a limited impact from President Xi’s US visit, with no new tariff cuts or AI dialogue mechanism agreed as the trade truce was only extended to January. USD/CNY rebounded after briefly dipping below 6.70, helped by higher US Treasury yields and a modest easing of PBoC control, while the central bank reiterated a moderately loose stance and commitment to Yuan stability.
Policy support and controlled flexibility
“China and US extend trade truce until January, but no major new outcomes emerged from President Xi’s visit – even the much-anticipated agreements on additional tariff cuts and an AI dialogue mechanism failed to materialize.”
“USD/CNY bounced back after a brief move below 6.70 as higher Treasury yields combined with a modest easing of the PBoC’s grip on the currency.”
“The PBoC reiterated its commitment to a moderately loose monetary stance, pledged to keep the yuan broadly stable and signalled a willingness to adjust policy tools as required. Chinese banks left both the 1y and 5y loan prime rates unchanged at 3.0% and 3.50%, respectively.”
“Liquidity support was stepped up, with the PBoC raising the daily reverse repo cap to CNY1tn and injecting a net CNY200bn through MLF operations.”
(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)
